Frankfurter Allgemeine Zeitung 18.06.2002, No. 138, p. 14

Against vested interests (Besitzstandswahrung) at the round table Hayek medal for the "Ludwig Erhard of New Zealand"
Roger Douglas campaigning for calculable reforms

SALZBURG, 17. June. Two things are necessary for successful economic reform: it must not be watered down by compromising with interest groups, and nobody must receive privileges. Roger Douglas, former Minister of Finance of New Zealand, put forward this watchword at the Hayek-days of the Friedrich-August-von-Hayek-Society in Salzburg. The round tables with interest groups popular everywhere may be good for the exchange of opinions between decision makers and those affected by their decisions; they must not, however, be used to adjust content, he said. "When you get up from the round table and everybody is happy, the result is guaranteed to be useless." The calculability of reform politics, however, is important, Douglas said: "People just need to know where the trip is taking them, and they need to be given time to adjust." That presupposes that decision makers do not give in those want to protect vested interests (Besitzstandswahrer): "It must be understood that the clock cannot be turned back."

Roger Douglas was awarded the Hayek medal in Salzburg in recognition of his radical reform policies, with which the former Labour Party member changed New Zealand into a political (ordnungspolitisch) role model and hope (Hoffnungsträger) in the 1980s. Christian Watrin, Chaiman of the Hayek-Society, praised Douglas as the "Ludwig-Erhard of New Zealand." He put into action the Hayekian perception that only private property and freedom of contract are at the root of a society's success, in connection with competition in price-controlled markets.

Under the New Zealand reform government of the 1980s, foreign trade and movement of capital were liberalised, the exchange rate decontrolled, the labour market deregulated and decentralised; agricultural subsidies were drastically reduced, taxes lowered, state-owned enterprises privatised and opened to competition. Contrary to Douglas' optimistic depiction of the advantages of dauntless policies, the electorate considered the connected burden of adjustment as too heavy, in spite of all transparency and determination on the side of the government: The New Zealand reform government was replaced at the end of the 1980s, the Labour Party split over controversy, and the present coalition government consisting of National Party and New Zealand First has abolished most of the liberal reforms. The liberal "Act" party founded by Douglas could not yet gain any appreciable significance.

According to Susanne Riess-Passer, Vice Chancellor of Austria, liberal reforms are only conceivable if the burden has really gotten too high. The success of her party, the FPÖ, can only be understood if one realises the degree of ossification and corporativist self-blockade of Austrian society, admitted the party chief, whose presence at the Hayek-days was not greeted with unanimous applause. It is difficult to change things in a country in which some interest groups' holdings have long since achieved constitutional status and every improvement, be it ever so marginal, presupposes a majority in parliament - for example certain privileges of teachers and taxi drivers.

"For great reforms, your need either a lever or bait," added Alfred Schüller, economist at Marburg University. As an example he mentioned the implementation of freedom of trade, which only became enforceable because it brought with it the prospect of being able to levy a trade income tax.

To push back the state and give more room to private initiative again also presupposes a certain degree of unselfishness among politicians. Against the background of a weak world economy, most countries are making an effort to lower taxes, said Hardy Bouillon, President of the Centre for the New Europe in Brussels. But there also is an opposing development that gives cause for concern, he warned. Voices are increasing who claim that the state has no need to justify itself if it demands taxes from its citizens; rather, as the organiser of economic life, they are its due, like a "toll" for providing a societal infrastructure. This perversion of thought must be curbed.